Question

In: Accounting

The unadjusted trial balance as of December 31, 2021, for the Bagley Consulting Company appears below....

The unadjusted trial balance as of December 31, 2021, for the Bagley Consulting Company appears below. December 31 is the company’s reporting year-end.

Account Title Debits Credits
Cash 13,150
Accounts receivable 7,250
Prepaid insurance 2,900
Land 205,000
Buildings 55,000
Accumulated depreciation—buildings 22,000
Office equipment 87,000
Accumulated depreciation—office equipment 34,800
Accounts payable 28,150
Salaries payable 0
Deferred rent revenue 0
Common stock 220,000
Retained earnings 46,050
Service revenue 79,000
Interest revenue 3,800
Rent revenue 4,500
Salaries expense 30,000
Depreciation expense 0
Insurance expense 0
Utilities expense 20,200
Maintenance expense 17,800
Totals 438,300 438,300


Information necessary to prepare the year-end adjusting entries appears below.

  1. The buildings have an estimated useful life of 50 years with no salvage value. The company uses the straight-line depreciation method.
  2. The office equipment is depreciated at 10 percent of original cost per year.
  3. Prepaid insurance expired during the year, $1,450.
  4. Accrued salaries at year-end, $1,150.
  5. Deferred rent revenue at year-end should be $700.


Required:
1. From the trial balance and information given, prepare adjusting entries.
2. Post the beginning balances and adjusting entries into the appropriate T-accounts.
3. Prepare an adjusted trial balance.
4. Prepare closing entries.
5. Prepare a post-closing trial balance.

Solutions

Expert Solution

BAGLEY CONSULTING COMPANY
ADJUSTING ENTRIES
DATE ACCOUNT DEBIT CREDIT CALCULATIONS
1 DEPRECIATION EXPENSE 1100 55000/50YRS
ACCUMULATED DEPRECIATION 1100
2 DEPRECIATION EXPENSE 8700 87000*10%
ACCUMULATED DEPRECIATION OF OFFICE EXPENSE 8700
3 INSURANCE EXPENSE 1450
PREPAID INSURANCE 1450
4 SALARY AND WAGES EXPENSE 1150
SALARY AND WAGES PAYABLE 1150
5 RENT REVENUE 700
DEFFERED RENT REVENUE 700

CLOSING ENTRIES

CJE1 SERVICE REVENUE 79000
INTEREST REVENUE 3800
RENT REVENUE 4500
INCOME SUMMARY 87300
CJE2 INCOME SUMMARY 79250
SALARY EXPENSES 30000
DEPRECIATION EXPENSES 9800
INSURANCE EXPENSE 1450
UTILITIES EXPENSE 20200
MAINTANENCE EXPENSE 17800
CJE3 INCOME SUMMARY 8050
RETAINED EARNINGS 8050
T ACCOUNTS
DATE DEBIT DATE CREDIT DATE DEBIT DATE CREDIT DATE DEBIT DATE CREDIT DATE DEBIT DATE CREDIT
CASH ACCOUNT ACCOUNTS RECIEVABLE PREPAID INSURANCE OFFICE EQUIPMENT
OP BAL 13150 OP BAL 7250 OP BAL 2900 OP BAL 87000
3 1450
BAL 13150 BAL 7250 BAL 1450 BAL 87000
LAND BUILDING ACC DEPRECIATION
OP BAL 225000 OP BAL 65000 OP BAL 22000
1 1100
BAL 225000 BAL 65000 BAL 23100
ACC DEPRECIATION OF OFFICE EQP ACCOUNTS PAYABLE SALARY PAYABLE DEFFERED REVENUE
OP BAL 34800 OP BAL 28150 OP BAL OP BAL
2 8700 4 1150 5 700
BAL 43500 BAL 28150 BAL 1150 BAL 700
COMMON STOCK RETAINED EARNINGS
OP BAL 220000 OP BAL 46050
BAL 220000 BAL 46050
SERVICE REVENUE INTEREST REVENUE RENT REVENUE SALARYIES EXPENSE
OP BAL 79000 OP BAL 3800 OP BAL 4500 OP BAL 30000
5 700 4 1150
BAL 79000 BAL

ekkarill92 answered 1 year ago
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